The poverty of neo-classical economics

Bjorn Lomborg takes a custard pie in the face at Border’s bookshop in Oxford
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An article published in The Guardian today pours scorn on the so-called Copenhagen Consensus, and not before time in my opinion. It has always been a mystery to me why The Economist insists on giving someone like Bjorn Lomborg so much air play when he has so little academic credibility. Without the help of The Economist, it is highly unlikely that Lomborg would have had sufficient sway to get eight Nobel prize winning economists to work together on this project where they get to decide how best to spend a hypothetical US$50bn dollars in order to advance global welfare. Tom Burke makes this point in his article, This is neither scepticism nor science – just nonsense, but more importantly draws attention to the limitations of applying cost-benefit analysis to the huge global challenges of hunger, water, migration and climate change, in order to rank them in terms of value for money. As Burke points out: ‘It is a vanity of economists to believe that all choices can be boiled down to calculations of monetary value.’ A stable climate, he observes is ‘a system condition for civilisation’.

This, in fact, is what differentiates environmental economists (operating within the neoclassical economics paradigm) and ecological economists. As Clive Hamilton writes of the former in The Mystic Economist (1994, p. 83), it is ‘breath-taking for its faith in humanity’s ability to control the natural world. With global climate change, we are talking about change to a complete system of unimaginable complexity; a system whose intricacies we have barely begun to understand. Who can possibly predict the consequences of global warming except at the crudest level?’